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PETITIONER: M. NARASIMHAIAH

       Vs.

RESPONDENT: DEPUTY COMMISSIONER FOR TRANSPORT, BANGALORE DIVlSION,INFANT

DATE OF JUDGMENT24/11/1987

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) SINGH, K.N. (J)

CITATION:  1988 AIR  240            1988 SCR  (2)  10  1987 SCC  Supl.  452     JT 1987 (4)   466  1987 SCALE  (2)1171

ACT:      Karnataka Motor  Vehicles Taxation  Act,  1957-Levy  of additional tax under section 8 thereof on stage carriage.

HEADNOTE: %      The appellant was a registered owner of a motor vehicle run by  him as  a stage carriage under a permit issued under the Motor  Vehicles Act,  1939. He  was liable to pay tax in respect of  the vehicle  under section  3 of  the  Karnataka Motor Vehicles Taxation Act, 1957, which provides that a tax at the  rates specified in Part A of the Schedule to the Act shall be  levied on  all motor  vehicles suitable for use on roads, and  item 4  in Part A of the Schedule to the Act, as it stood  in 1985,  relates to  the levy of tax on the motor vehicles used as stage carriages.      On some  occasions, it  was found  that the  appellants stage carriage  was carrying  passengers in  excess  of  the number of  passengers allowed to be carried under the permit issued to  him under  the  Motor  Vehicles  Act,  1939.  The taxation authority under the Karnataka Act above-said issued to him  a demand  for the  payment of  additional tax  under section 8  of the  said Act.  The  appellant  filed  a  writ petition, challenging the demand for the additional tax. The High Court  dismissed the  petition, following  its  earlier decision in  Noorullha Khan  v.  State  of  Karnataka  (Writ Petition No.  8302 of  1980, etc.  decided on  26.6.85.) The appellant appealed  to this  Court by  special leave against the order of the High Court.      Allowing the appeal, the Court, ^      HELD: The  taxation authority levied the additional tax under section  8 of  the Karnataka  Motor Vehicles  Taxation Act, 1957,  on the ground that the appellant had proposed to use the  vehicle in such a manner as to cause the vehicle to become a  vehicle in  respect of  which a higher rate of tax was payable,  in accordance  with the  decision of  the High Court in  the Noorullha  Khan’s case.  The  payment  of  the additional tax  arises as per section 8 on two occasions-(i) when the Motor 11

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Vehicle is  altered in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable, or (ii) when any motor vehicle is proposed to be used in  such a  manner as  to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable. The vehicle  in question  has not  been altered,  and it has been used  only as  a stage  carriage, even when two or five extra persons have been carried. There is no other provision in Part A of the Schedule to the Act which requires a higher rate of  tax to  be paid  in respect  of a  vehicle which is being used  as a  stage carriage  on the  basis of  a larger number of  passengers that  are carried in it. It would have been possible  to levy a higher tax on the appellant only if the words  ’which the vehicle is permitted to carry’ in item 4(2) of  Part A to the Schedule to the Act had been omitted. These words  cannot be  ignored in  the construction  of the said item  since it  relates to  the levy  of tax. Also, the provision in section 8 is specific. [17G-H; 18A-C, F-G]      The High  Court in Noorullha Khan’s case overlooked the presence of  the words  ’which the  vehicle is  permitted to carry’, found  also in clause (b) of item 7 of the Karnataka Act. A law which imposes a tax should be construed strictly. A registered owner of a motor vehicle, which is permitted to be  used  as  a  stage  carriage  cannot  be  asked  to  pay additional tax  under section 8 of the Act merely because he has carried  on some  occasions  more  passengers  than  the maximum number  of passengers  that he is permitted to carry under the  permit. The  tax which  he is  liable to  pay  is limited by  the maximum  number of passengers he is entitled to carry under the permit. The Court does not agree with the decisions of  the High  Court in  the Noorullha Khan’s case, which is  overruled. The judgment of the High Court impugned set aside  and the  respondents directed  not  to  levy  the additional tax  on the  appellant under  section  8  of  the Karnataka Taxation  Act for  carrying more  passengers  than what he was permitted to carry on some occassions during the period in  question. Need  impressed upon the authorities to enforce the  provision in  section 60  of the Motor Vehicles Act, 1939, strictly.[20A, D-F]      Payne v. Allock, [1932] 2 KB 413, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 3031 of 1987.      From the  Judgment and  order  dated  9.7.1985  of  the Karnataka High Court in Writ Petition No. 31533 of 1982 12      S.S. Javali,  Ravi P.  Wadhwani,  M.Rangaswamy,  N.D.B. Raju, C.  K .  Sucharita and  Mrs. C.K.  Sucharita  for  the Appellant K.L. Sharma and M. Veerappa for the Respondents.      The Judgment of the Court was delivered by      VENKATARAMIAH, J.  Aggrieved by  the levy of additional tax under section 8 of the Karnataka Motor Vehicles Taxation Act, 1957  (hereinafter referred to as ’the Act’) in respect of his  motor vehicle,  which he has been running as a stage carriage under  a permit  issued under the provisions of the Motor Vehicles  Act, 1939,  the appellant  herein questioned the levy of the said additional tax before the High Court of Karnataka in  Writ Petition  No. 31533  of 1982.  That  writ petition was  dismissed  by  the  High  Court  following  an earlier decision  of a  Division  Bench  of  that  Court  in Noorullha Khan v. State of Karnataka (Writ Petition No. 8302

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of 1980  and connected  cases  decided  on  26.6.1985).  The appellant has filed this appeal by special leave against the decision of the High Court dismissing his writ petition      The facts  of the case are briefly these. The appellant is the  registered owner  of the  motor vehicle which he has been running  as a  stage carriage  under a permit issued by the Regional Transport Authority under the provisions of the Motor Vehicles Act, 1939. He is liable to pay tax in respect of the  said motor  vehicle under section 3 of the Act which provides that  a tax at the rates specified in Part A of the Schedule to  the Act  shall be  levied on all motor vehicles suitable for  use or roads. Item 4 in Part A of the Schedule to the  Act, as  it stood in the year 1985, which related to the levy  of tax  on motor vehicles which were used as stage carriages reads thus:- Class of vehicles                    Quarterly tax for                                      vehicle fitted with                                      pneumatic tyres ____________________________________________________________               (1)                               (2) ____________________________________________________________ "4. Motor Vehicles other than those mentioned in items 5, 6 and 7 plying for hire and used for transport of passengers and in respect of which permits have been issued under the Motor Vehicles Act, 1939. 13 (i) Vehicles permitted to carry in all:        Rs. p. (a) not more than three persons                 40.00 (other than the driver) (b) Four persons (other than                    75.00 the driver) (c) Five persons (other than                    90.00 the driver) (d) Six persons (other than the driver)        200.00 (ii)(1) Vehicles permitted to carry more than six persons and plying exclusively on routes within the limits of cities and towns notified by the Government and other vehicles not falling under (2) below: (a) For every seated passenger                 130.00 (other than the driver and the conductor) which the vehicle is permitted to carry. (b) For every passenger (other than             45.00 the seated passenger, the driver and the conductor) which the vehicle is permitted to carry. (2) Vehicles permitted to carry more than six persons and the total mileage of which exceeds 100 kilometers per day: (a) For every seated passenger                 160.00 (other than the driver and the conductor) which the vehicle is permitted to carry. (b) For every passenger (other than             45.00 the seated passenger, the driver and the conductor) which the vehicle is permitted to carry. " 14      Item 5  of part  A of  the Schedule  to the  Act, as it stood during  the relevant time. referred to the tax payable by motor  vehicles which  were used  as  contract  carriages

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under permits  issued under  the Motor  Vehicles Act,  1939. Item 6  of part  A of  the Schedule  to  the  Act  has  been repealed. Item 7 of Part A of the Schedule to the Act, as it stood during the relevant period, dealt with the tax payable in respect of omnibuses It read thus: ____________________________________________________________ Class of Vehicles                     Quarterly tax for                                       vehicles fitted with                                       pneumatic tyres ____________________________________________________________          (1)                                      (2) ____________________________________________________________ "7. Omnibuses,-                                  Rs. p. (a) permitted to carry not more than 10             50.00 persons (excluding the driver), for every person which the vehicle is permitted to carry: (b) permitted to carry 11 persons or               100.00 more (excluding the driver), for every person which the vehicle is permitted to carry.      The appellant  was liable  to pay  at the  time when he filed the  writ petition  Rs.160.00 per  quarter  for  every seated passenger  (other than  the driver and the conductor) which the  vehicle was  permitted to  carry  and  Rs.45  per quarter  for   every  passengers   (other  than  the  seated passengers, the  driver and the conductor) which the vehicle WAS permitted  to carry. Section 8 of the Act which provides for payment  of additional  tax in respect of motor vehicles reads thus:-           "8.  Payment  of  additional  tax-When  any  motor           vehicle in respect of which a tax has been paid is           altered or  proposed to be used in a such a manner           as to cause vehicle to become a vehicle in respect           of which  a higher  rate of  tax is  payable,  the           registered owner or person who is in possession or           control of  such vehicle  shall pay  an additional           tax or  a sum  which is  equal to  the  difference           between the  tax already paid and the tax which is           payable in respect of 15           such vehicle  for the  period for which the higher           rate of tax is payable in consequence of its being           altered or  so proposed  to be  used and  taxation           authority shall not grant a fresh taxation card in           respect of  such vehicle so altered or proposed to           be so used until such amount of tax has been paid.      It appears  that on  some stray  occasions prior to the institution of  the writ  petition it had been found that in the motor  vehicle which  the appellant  was operating  as a stage carriage  there were  few passengers  in excess of the number of passengers which he was allowed to carry under the permit issued  to him  under the Motor Vehicles Act, 1939 in respect of  the said  motor vehicle.  The taxation authority under the  Act, therefore,  issued a  demand for  payment of additional tax  under the provisions of section 8 of the Act on the  ground that  the appellant  had proposed  to use the motor vehicle  in such  a manner  as to cause the vehicle to become a  vehicle in  respect of  which a higher rate of tax was payable  following the  decision of  the High  Court  in Noorullha Khan’s  case (supra). Aggrieved by the said demand he  filed  the  writ  petition.  As  mentioned  above,  that petition having been dismissed, this appeal by special leave has been filed.      Since the  judgment of  the High  Court under appeal is

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based on the decision in Noorullha Khan’s case (supra) it is necessary to  set  out  briefly  the  facts  in  that  case. Noorullha Khan  who was  the petitioner in that case was the registered  owner  of  a  motor  vehicle  classified  as  an ’omnibus’ with  a  seating  capacity  of  15+  1  under  the provisions of the Motor Vehicles Act, 1939 and was subjected to tax  on that  basis under  item 7(b)  of Part  A  of  the Schedule to the Act. He was liable to pay at the rate of Rs. 100 per  seat per  quarter under the said provision. He was, however, called  upon by  the taxation  authority to  pay an additional sum  by way  of tax  on two  different  occasions calculating the tax on the basis of the number of passengers carried in the vehicle on those two occasions. He challenged the  said   demands  before   the  Deputy  Commissioner  for Transport in  appeal. That  appeal having  been dismissed he filed Writ  Petition No. 8302 of 1980, referred to above, on the file  of the  High Court.  The High  Court took the view that the  petition in  that writ  petition having  used  the vehicle on  two occasions  for carrying passengers in excess of the  number of  passengers which  he was allowed to carry under the  permit he had become liable to pay additional tax for the  ’proposed user’  of the  motor vehicle  in a manner different from  the manner  in which he was permitted to run it. In support of its decision the High Court 16 relied strongly  on the decision in Payne v. Allcock, 119321 2 K  B. 413  in which the conviction of the owner of a motor vehicle in respect of which he had obtained a licence to use it as  a private  motor car  for  having  used  it  for  the conveyance of goods had been upheld.      The Motor  Vehicles Act,  1939 is  a central act, which was enacted  pursuant to Entry 20 of List III of the Seventh Schedule to  the Government of India Act, 1935 corresponding to Entry  35 of  List III  of the  Seventh Schedule  to  the Constitution of India. The Act under which a tax is leviable on motor  vehicles has  been enacted  by the Karnataka State Legislature in exercise of its powers under Entry 57 of List II of  the Seventh  Schedule to  the Constitution  of India. Thus the  scope of  the Act  and  the  scope  of  the  Motor Vehicles Act,  1939 are entirely different Section 42 of the Motor Vehicles  Act,  1939  provides  that  no  owner  of  a transport vehicle shall use or permit the use of the vehicle in any  public place whether or not such vehicle is actually carrying any  passenger or goods save in accordance with the conditions  of  a  permit  granted  or  countersigned  by  a Regional or  State Transport  Authority  or  the  Commission authorities the  use of  the vehicle  in that  place in  the manner in  which the  vehicle is  being used. The expression ’permit’  is  defined  under  section  2(20)  of  the  Motor Vehicles Act, 1939 as a document issued by the Commission or a State  or Regional Transport Authority authorizing the use of a  transport vehicle  as a  contract carriage,  or  stage carriage, or  authorizing the  owner as a private carrier or public carrier  to use  such vehicle.  Section 2(29)  of the Motor Vehicles  Act,  1939  defines  the  expression  ’stage carriage’ as  a motor  vehicle carrying  or adapted to carry more than  six persons  excluding the  driver which  carries passengers for  hire or  reward at separate fares paid by or for individual  passengers, either  for the whole journey or for stages  of the journey. Section 2(j) of the Act provides that the  words and  expressions used but not defined in the Act, shall  have the  meanings assigned to them in the Motor Vehicles Act,  1939. Section 48(3)(vi) of the Motor Vehicles Act, 1939 provides that the Regional Transport Authority, if it decides  to grant  a stage carriage permit, may grant the

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permit specifying  the maximum number of passengers that may be carried  in the  motor vehicle  in respect  of which  the stage carriage  permit is  issued. Section  60 of  the Motor Vehicles Act, 1939 empowers the Regional Transport Authority to cancel  or suspend  a permit for such period as it thinks fit on  the breach  of any of the conditions attached to the permit. Thus  a person  who has  obtained a  stage  carriage permit exposes  himself to  the cancellation  of the  permit itself under  section 60 of the Act if he carries passengers in excess of the 17 maximum number  of passengers  that he is permitted to carry under the permit.      Under clause (2) of item 4 of Part A of the Schedule to the Act  the owner of a vehicle used as a stage carriage the total mileage  of which  exceeded 100 kilometers per day had to pay for every quarter during the relevant time Rs.160 for every seated  passenger  (other  than  the  driver  and  the conductor) and  Rs.45 for  every passenger  (other than  the seated passenger,  the driver  and the  conductor) which the vehicle was  permitted to  carry.  According  to  the  above provision if  the owner of a motor vehicle, which is used as a stage  carriage, who is permitted to carry, say, 45 person including the driver and the conductor of whom 40 are seated passengers and  3 are  standing passengers,  he has  to  pay Rs.6,535 for  every quarter.  The question  is whether he is liable to  pay and additional tax under section 8 of the Act if he  carries on  any occasion  any passengers in excess of the number  of passengers  he is  permitted to  carry Let us assume that the registered owner of the motor vehicle in the above case has carried on one occasion in a given quarter 47 passengers (inclusive  of the  driver and the conductor) and on another  occasion  in  the  same  quarter  50  passengers (inclusive  of  the  driver  and  the  conductor).  In  this illustration the  question which arises for consideration is whether the  registered owner  is liable to pay Rs.6,535 for that quarter  or Rs.6,535 plus the additional tax in respect of two  more passengers  or Rs.6,535 plus the additional tax for five  more passengers  during that quarter. Section 8 of the Act  PROVIDES that  when any motor vehicle in respect of which a  tax has been paid is altered or proposed to be used in such  a manner as to cause vehicle to become a vehicle in respect of  which a  higher rate  of  tax  is  payable,  the registered owner  or person  who is in possession or control of such  vehicle shall  pay an additional tax of a sum which is equal  to the difference between the tax already paid and the tax  which is payable in respect of such vehicle for the period for  which the  higher rate  of  tax  is  payable  in consequence of  its being  altered or so proposed to be used and the  taxation authority shall not grant a fresh taxation card in respect of such vehicle so altered or proposed to be used until  such amount  of tax  has been  paid. The crucial words in  section 8  of the  Act are ’when any motor vehicle ........ is  altered or proposed to be used in such a manner as to  cause the  vehicle to  become a vehicle in respect of which a  higher rate  of tax  is payable’.  The  payment  of additional tax arises, therefore, only on two occasions; (i) when the  motor vehicle  is altered  in such  a manner as to cause the  vehicle to become a vehicle in respect of which a higher rate of tax is payable; or (2) when any motor vehi- 18 cle is  proposed to be used in such a manner as to cause the vehicle to  become a  vehicle in  respect of  which a higher rate of  tax is payable. Admittedly, the vehicle in question has not  been altered  The  question  which  remains  to  be

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considered is  whether in  the given  case  the  vehicle  is proposed to be used in such a manner as to cause the vehicle to become a vehicle in respect of which a higher rate of tax is payable.  The vehicle in question has been used only as a stage carriage  even when  two or five extra passengers have been carried.  There is  no other provision in Part A of the Schedule to  the Act  which requires a higher rate of tax to be paid  in respect  of a  vehicle which  is being used as a stage carriage on the basis of a larger number of passengers that are  carried in  it. In  order to bring the case within the scope  of section  8 of  the Act  it must be first shown that there  is a  provision in  the Act  which makes a stage carriage vehicle which carries a larger number of passengers than what is permitted under the permit issued in respect of it is  subject to  a higher rate of tax. The highest rate of tax in  respect of a stage carriage that can be levied under the Act  is incorporated in clause (2) of item 4. Sub-clause (a) of  clause (2)  of item  4 of  the Schedule  to the  Act provides that  for every  seated passengers  (other than the driver and  the conductor) which the vehicle is permitted to carry the  registered owner  is liable to pay Rs.160 and for every passenger (other than the seated passenger, the driver and the  conductor) which  the vehicle is permitted to carry has to pay Rs.45 per passenger per quarter. In both the sub- clauses the liability of the registered owner is governed by the number of passengers that he is permitted to carry under the permit  issued in  his favour  under the  Motor Vehicles Act, 1939 and thus his liability is limited by the condition incorporated in the permit.      It would  have been  possible to levy higher tax on the appellant  p  only  if  the  words  ’which  the  vehicle  is permitted to  carry’ in  item 4(2) of Part A to the Schedule to the  Act had  been omitted  The Court cannot ignore those words while construing the said item since it relates to the levy of  a tax.  Moreover the  provision  in  section  8  is specific. It  says that the additional tax shall be equal to the difference  between the  tax already  paid and  the  tax which is  payable in  respect of such vehicle for the period for which  the higher  rate of tax is payable is consequence of its  being altered  or so  proposed to  be used in such a manner as  to cause  the vehicle  to  become  a  vehicle  in respect of which a higher rate of tax is payable.      There is  another difficulty  in applying  section 8 to stray cases  of overloading.  Additional tax  is payable for the period during which the 19 vehicle is  proposed to  be used  for a  purpose which  will attract a  higher rate  of tax.  The rate  of tax  is  fixed taking one  quarter i.e.  3 months  as a  unit of  time  for taxation. Is  it reasonably possible to determine the higher rate of  tax payable, if say, on two days in a quarter there has been  overloading of  the vehicle  for a  few  hours  or minutes?  The  problem  of  computation  of  additional  tax becomes difficult in such cases      There is another important circumstance which persuades us to  disagree with  the construction  placed by  the  High Court on  the relevant provision of taxation in the Act. The rate of  taxation in this case is not based on the number of passengers actually  carried during  any period  in a  motor vehicle used  as a  stage carriage  but it is related to the number of passengers which the motor vehicle is permitted to carry under  the permit.  If the  number of  the  passengers carried during  any period  is less  than what is permitted, the registered  owner of  the motor vehicle does not get any rebate He  has to  pay the tax at the rate determined by the

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number of  maximum passengers  mentioned in  the permit even when the  stage carriage is run without any passengers. When that is the position there appears to be no justification to hold that  the registered  owner or whoever is liable to pay the tax  should be  made to  pay the  additional tax  merely because on  some stray  occasions the motor vehicle is found to have  carried a  few  more  passengers  than  the  number permitted under  the permit  since the  tax is not levied on the basis of the number of passengers actually carried.      The decision  in Payne  v. Allock,  (supra) is  clearly distinguishable from  the present  case. In  that  case  the appellant had  paid the duty under para 6 of the Schedule II to the  Finance Act, 1922 which was a residuary clause under which he  had to  pay   16 for  taking out  the licence for using his  motor vehicle  as a private motor car. But he was found to  be using  the vehicle  for the purpose of carrying goods for  a fairly  long period  which brought  the vehicle under the  5th para  of that  schedule which levied a higher rate of  tax. In  the case  before us,  as we  have  already pointed out  the vehicle  could not be subjected to a higher rate of  tax under  any other item in Part A to the Schedule to the Act      The argument  urged on  behalf of  the State Government that the  liability of  the registered  owner to  pay tax in respect of  a stage  carriage depends  upon  the  number  of passengers carried  in a  vehicle on  a given  date does not appeal to us because in that event the words 20 which the  vehicle is permitted to carry in item 4(2) become meaningless and  ineffective. The  High Court  in  Noorullha Khan’s case  (supra) overlooked  the presence  of the  words ’which the vehicle is permitted to carry’ which are found in clause (b)  of item  7 of  the Act also. It is no doubt true that it  is not  in the  public interest  that a  registered owner of  a motor  vehicle should  be allowed  to carry more passengers than  the maximum number of passengers that he is allowed to carry under his permit and such a tendency on the part of  any registered  owner should  be checked That fact, however, cannot be relied upon for the purpose of construing the items in Part A of the Schedule to the Act liberally and in favour  of the  State Government.  It is  needless to say that a law which imposes a tax should be construed strictly. If the  action on  the  part  of  the  registered  owner  is contrary to  the provisions  of the Motor Vehicles Act, 1939 there  is   sufficient  provision   in  that   Act  to  take appropriate action  against him  and either  to  cancel  the permit or to suspend it.      In the  instant case  we feel  that when  a  registered owner of  a motor vehicle which is permitted to be used as a stage carriage  cannot be  asked to pay additional tax under section 8  of the  Act merely because he has carried on some occasions  more   passengers  than  the  maximum  number  of passengers that  he is  permitted to carry under the permit. The tax  which he is liable to pay is limited by the maximum number of  passengers he  is entitled  to  carry  under  the permit. We, therefore, do not agree with the decision of the High Court  in Noorullha Khan’s case (supra). We overrule it The judgment  of the High Court against which this appeal is filed is  liable to  be set  aside. It  is  accordingly  set aside. The  respondents are  directed not to levy additional tax on the appellant under section 8 of the Act for carrying more passengers  than what he was permitted to carry on some occasions during  the period  in question.  But  we  however impress  upon  the  authorities  the  need  to  enforce  the provision in  section 60  of the  Motor Vehicles  Act,  1939

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strictly.      The appeal is accordingly allowed. No costs S.L.                                         Appeal allowed. 21